Judge Wondering -- Is Bridgeport Broke?

Judge Wondering Is Bridgeport Broke?

BRIDGEPORT -- The city of Bridgeport had $46.5 million in the bank the day it filed for bankruptcy and expects to have millions in cash available every day for the next year.

So is the city really broke? U.S. Bankruptcy Judge Alan H.W. Shiff appeared keenly interested in that question Thursday during the third day of the city's bankruptcy hearing. Bridgeport's finance director, Richard Robinson, spent 3 1/2 hours on the witness stand Wednesday and Thursday, but court spectators listened most intently after the lawyers were done and Shiff had some questions of his own.

Robinson had testified that the city is projected to overspend its budget by $16 million this year. The city will be able to pay its bills by dipping into a $25 million cushion of borrowed money, but Robinson said the money had to be replenished.

Shiff wanted to know how quickly.

"Does it have to be paid back in fiscal year '91-92?" the judge asked.

Robinson said it had to be accounted for by the end of the year.

The two wrangled over the difference between the city's obligation to account for the money on paper and its obligation to come up with the cash. In the end, Robinson said it was possible the city could defer repaying the borrowed money until the following budget year.

To grant the city's bankruptcy petition, Shiff will have to determine that the city is insolvent. The state argues that the city's cash reserves suggest it is not insolvent, but the city believes the judge can look into the future to assess a city's inability to pay it's debts.

State Attorney General Richard Blumenthal, who is opposing the bankruptcy filing, said he was "encouraged" by Shiff's interest.

"I think his line of questioning was extremely apt and cut to the heart of the legal issue, which is whether the city was insolvent at the time of the filing," Blumenthal said during a break.

Richard Zeisler, a bankruptcy attorney representing the city, agreed that Shiff's questions illustrate the judge is aware of the

legal disputes in his courtroom, but said they did not indicate how the judge was leaning.

During Thursday's hearing, the city also called on an economics and law professor at the University of Pennsylvania. Robert P. Inman, an expert in municipal economics, testified that Bridgeport's financial troubles are typical of cities with older, poorer populations and a declining manufacturing base.

He said the only workable options for revitalizing the city were an increase in state or federal aid, a reduction in the cost of wages and benefits and a restructuring of pension benefits.

He said a tax increase would be counter-productive because it would drive homeowners and businesses out of the city.

"I do think it would be a serious mistake to raise taxes," Inman said.

David Hetzel, a lawyer with Hebb & Gitlin, a Hartford bankruptcy firm hired by the attorney general's office, challenged Inman's conclusions and said Inman was unaware of many details affecting Bridgeport's finances.

The trial is scheduled to resume this morning, and Zeisler said he expects to finish presenting his evidence today